Don't pay more than the minimum on your credit cards!

Cant you just use your card as the emergency fund? Im kinda confused because I dont have credit cards. I live a zero debt kinda life.
 
Even more than the emergency fund, I would use the CC to get emergency supplies such as food, water, etc. then work on the emergency cash (real cash, not FRNs) and then paying off the debt.

It is better to be bankrupt and have food than bankrupt and starving.
 
Original_Intent said:
Even more than the emergency fund, I would use the CC to get emergency supplies such as food, water, etc. then work on the emergency cash (real cash, not FRNs) and then paying off the debt.

It is better to be bankrupt and have food than bankrupt and starving.
Click to expand...

Yeah I was thinking that too. Why are they trying to get people into the failing dollar so fast?
 
actually now is the best time to go into debt

interest rates are low and we are about to turn the corner from deflationary depression to either inflationary depression or stagflation

during times of high inflation you want to be a debtor because your debt gets wiped out
 
jy006m said:
actually now is the best time to go into debt

interest rates are low and we are about to turn the corner from deflationary depression to either inflationary depression or stagflation

during times of high inflation you want to be a debtor because your debt gets wiped out
Click to expand...

Can't they just raise the interest to make up for the inflation? If I have 20k in credit card debt at 20% interest in high inflation hits, can't they just raise my interest to 40%?
 
Credit cards kept my ol' pickup truck repaired when I was broke... that ol' truck took me to work so it had to keep running, also had other unexpected expences.

Later I made an interest lowering deal with a different credit card company and paid extra each month, and after 5 years, got it all paid off.

At same time it was necessary put a little money away for emergencies... by not haveing a cell phone, cable tv, and keeping on a budget this was achieveable.
 
nick.mccann said:
Can't they just raise the interest to make up for the inflation? If I have 20k in credit card debt at 20% interest in high inflation hits, can't they just raise my interest to 40%?
Click to expand...

I don't see why not.

I'd totally pay it off so they can't charge more interest, why prolong the debt?
 
nick.mccann said:
Can't they just raise the interest to make up for the inflation? If I have 20k in credit card debt at 20% interest in high inflation hits, can't they just raise my interest to 40%?
Click to expand...

true, I guess it only works if you go for fixed rate loans
 
nick.mccann said:
Can't they just raise the interest to make up for the inflation? If I have 20k in credit card debt at 20% interest in high inflation hits, can't they just raise my interest to 40%?
Click to expand...

I believe there is a federal law that says they can't charge more then 25-30% credit. Basically, you are locked in to the lower rate you agreed to if you pay off at least the min every month. If you don't pay of the min, they can really jack up the interest rate and will!

I've got a CC that I rarely use and have always payed off instantly in order to avoid any interest but at the same time build my credit rating. I have only used it on fairly large ticket items. But I've been pondering a strategy along the lines of this thread.

Here is the idea:

I use the CC to either buy PM's and/or commodity market funds that should go up if we hit hyper-inflation. I do not buy more than I could instantly pay off with cash in the bank and still have enough readily available FRN's to deal with emergencies. I want to convert the deflationary currency to something that is worth something.

Basically, the return on savings and my IRA pretty much sucks, and I'd like to convert that to something that could if/when the economy goes to hell. But I also want the best of both worlds and have a deeper reserve in the bank that I can get at fast and something I could sell off (perhaps at a loss) where I couldn't get my money back as fast. I would keep a reserve of FRN's in the bank and not cut it to the bone... Enough to deal with emergencies.

Then I would set up a insta-pay via my bank where the min or more would be instantly be paid off every month on the CC, guaranteeing I don't get hit with the higher CC interest rates.

downsides: interest on CC, additional 2-3% charge if I go with PM's, slight charge for insta-pay. possible loss if Obama's plan works and PM's / commodity prices take a nose dive (Not frickin likely!).

Scenarios:

The economy goes to hell. PM's and other things skyrockets while the value of the dollar takes a nose dive and I'm sitting really well.

It remains level - I hold, take a short term minor loss, and look for returns later. Maybe minimize loss ASAP by paying off debt.

The Obama/Bernanke plan works and I loose big (like when pigs fly...)

I don't like to gamble - but I think this is a really good bet! What am I missing? Input please?

Personally, this is one of a couple of scenarios I'm considering, am I missing something big? Input appreciated?

I think PM's and the commodity market are going to go down in the short term, so I'm watching and thinking. I want to have a good plan in hand when I see them start to go up again.

One other thing - I have a ROTH IRA whos' return has been LOUSY! - I believe I pay a 15-20% penalty for cashing out early. I also saw a infomercial that claimed you could convert a IRA to PM's, but I know about nothing about this. Anyone? - would cashing out be a good idea? or how could I move those investments?

thanks,

-t
 
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Remember the article by Merdith Whitney? She believes credit card limits will be cut this year. So, if you pay down your credit card, chances are you might see your limit ride your balance all the way down. This happened to HELOC borrowers, and anyone with a HELOC found out the hard way they no longer had access to money they thought they had. So the idea is, instead of paying down your credit card, save some cash instead....because you can no longer rely on your credit lines as a source of liquidity.
 
Mortgage rates may be low but credit card rates certainly are not. Paying the minimum on your credit card means that you end up paying several multiples of the price you think you paid for goods you bought. This is not wise. The high interest rates are also much higher than the rate of inlfation- meaning that perhaps you are paying your bills with money which is worth less than when you bought the thing but the cost of the credit is going up faster than the dollar goes down. Delaying paying off a debt only makes sense when you can get a better return by not doing so. That would mean having an investment offering a higher rate of return than the interest you are paying or prices going up at a faster rate than your interest rate. Neither of those conditions exists right now- in fact they rarely do with credit cards.

Borrowing money on a credit card for investing is an even worse idea- again, your investment would have to be able to generate a higher return than your credit card interest or you are losing money. Nothing is offering 20 25% rates of returns these days.
 
Credit card companies consider me a deadbeat because I pay off my balance every month.
 
All i will say is that credit card companies could decide to turn off your credit tomorrow, regardless of your credit score, so do not expect to use a credit card as an emergency source of funds. It may very well be UNAVAILABLE.
 
I still have 2k to pay off. My idea was to pay it off asap and never go into debt again. Do some of you really think I should just pay the minimum until inflation hits? Unless hyperinflation happens sooner than I can pay off the card I don't see the logic.
 
If you have debt and no money for an emergency fund, you can put money towards both. Save some and put some to debt. If you have enough cash or cash equivelent to live on for say six months then I would put everything towards the debt. Once the debt is gone, you need less money to live on since you no longer need to make that payment plus interest. Hyperinflation (if it even happens) will not bail you out of your debt. It will still be there but everything else will cost more. Without the debt you will have a little more money than if you still owed on it.
 
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